If the funds diversions at the center of the Shag Fund story was just an innocent accounting issue, why did Team Rudy start stonewalling city investigators on it as far back as 2001 when Rudy was still mayor?

Spinning Shag Fund ain’t working, so the Rudy camp is going into press lockdown mode:

Giuliani, who is normally friendly to reporters, bristled past them, and campaign staffers were unusually physical in keeping the press away. Several campaign aides told campaign reporters to return to the press area, and some of his security detail manhandled reporters.

As you can see we’re wall to wall, double-ply Shag today. But don’t miss this piece by Glenn Greenwald comparing the Times excellent analysis of Rudy’s phony stats with the Post’s Muslim Obama hack job.

Reports out of New Hampshire indicate an armed man has taken hostages at a Clinton campaign office in Rochester.

Clinton herself was not present.

Man reportedly has bomb strapped to himself, according to a hostage who was released with her baby.

Sen. Clinton has canceled her scheduled appearance at the DNC meeting in Virginia.

Late Update: Reports remain conflicting about how many hostages have been released thus far but it appears to be that a total of three, plus a baby, have been released.

More soon.

Hmmm. Ray Kelly, who was Police Commissioner right before and right after the Rudy era, says he never heard about any of the reimbursement delays that Team Rudy has been using to explain the squirrelly accounting procedures.

Turns out Rudy’s security firm has done extensive work for a Qatari government official suspected of harboring the guy who planned 9/11.

Yesterday, every reporter who wanted a copy, was allowed to go down to City Hall and pick up copies of the city financial records that were the basis of the original Shag Fund report in the Politico.com. That’s how we found out about the weird $400,000 prepayment to American Express, which appears to have been yet another method of taking city money and running it through enough buckets that it could be used for pretty much anything Rudy and his crew wanted to use it for. Some stuff legit, other stuff pretty questionable. The Daily News asked top Giuliani advisor Anthony Carbonetti about the prepayment and were told that, “it’s fiscally responsible to anticipate predictable expenses and prepay them.”

In other words, I guess fiscal responsibility can mean a lot of things.

In any case, this was a pretty thick stack of paper. Our muck crew actually spent pretty much the whole trying to make sense of it. (We actually broke in a new intern yesterday working exclusive on the Shag Fund accounting project, who did a great job.) We focused on the accounting methods while the city dailies focused more on what was actually paid for. So, from looking at their articles this morning, we can get yet a fuller picture.

The Shag Fund not only paid for the 11 tryst visits to Hamptons.

— It paid for hotel and other expenses for mayoral aides — in addition to the security detail — who also went with the mayor to the Hamptons on the tryst weekends.

— Nathan’s NYPD-chauffeured trips (without Rudy) to visit her parents in Pennsylvania, 130 miles outside the city.

— NYPD detectives and city-owned undercover Dodge to drive Nathan around the city.

— NYPD detectives and city-owned undercover Dodge to drive Nathan’s friends and family around the city even when she wasn’t in the car.

— NYPD security detail for Nathan, personally approved by Bernard Kerik.

— NYPD cops to walk Nathan’s dog.

Okay, point of publisher’s privilege. Please indulge me.

One of our favorite stories of 2007 was Sen. Lisa Murkowski’s (R-AK) sweetheart, half-price vacation house deal from Alaska sportsfishing mogul Bob Penney. It was some great shoe-leather investigative reporting by TPMmuckraker.com alum Laura McGann.

Well, this week Murkowski sat down with the editorial board of the Alaska Daily News and among other things they asked her what she’d learned from the land deal experience.

Her answer?

Shouldn’t have blown off that call from TPMmuckraker.com. As the ADN editors described it …

She gave a lame answer about what lessons she learned from the controversy over her now-canceled purchase of a Kenai River waterfront lot from Bob Penney, a wealthy sportfish activist and campaign contributor who is also a family friend. She suggested her biggest mistake was blowing off the first media inquiry about it, because it came from an unfamiliar web organization with “muckraker” in the title.

If you click this link they actually have audio of her answer, which is a good deal funnier than the description.

For what it’s worth, Murkowski pretty clearly turns out to be the honest and ethical member of the Alaska congressional delegation. But it’s not too high a bar since the other two members of the delegation, Sen. Stevens (R) and Rep. Young (R), are both under criminal investigation for various corruption.

For a fun trip down memory lane …

Apparently the two police detectives and undercover police vehicle put at Judi Nathan’s disposal for travel around the city when she was still Rudy’s mistress were routinely forced to ferry Nathan’s friends and family around the city as well.

Last week, in one of his more breathtaking lies, Karl Rove told a national television audience that it was Congress, not the Bush White House, that pushed for an Iraq war resolution in advance of the 2002 midterm elections. Rove said the administration was “opposed” to moving “too fast,” and that the president and his aides wanted the debate “outside the confines of the election.”

Since then, there’s been one thing everyone, on both sides of the aisle, can agree on: Rove is lying. Then-Senate Majority Leader Tom Daschle said Rove either has “a very faulty memory, or he’s not telling the truth,” a sentiment echoed by then-House Minority Leader Dick Gephardt’s office.

Rove’s former colleagues are just as blunt. Former White House Chief of Staff Andy Card not only said Rove is wrong, but added, “[S]ometimes his mouth gets ahead of his brain.” Former White House Press Secretary Ari Fleischer concluded, “I think Karl in this instance just has his facts wrong.” Former Bush counselor Dan Bartlett added, “This is the first time I’ve ever heard Karl say that.”

Confronted with this reality, Karl Rove did what we’d expect him to do: he repeated the lie as if reality had no meaning.

Rove repeated his assertion in an interview yesterday, pointing to comments made by Democrats in 2002 that they wanted a vote. “For Democrats to suggest they didn’t want to vote on it before the election is disingenuous,” he said.

Rove could have very easily explained that he misspoke during his interview last week, or misunderstood the question. But not this guy — he lied, got caught, was thrown under the bus by his former colleagues, and then went back and repeated the lie all over again.

For what it’s worth, the Washington Post did a report on this, but was reluctant to use the “f” word (“false), or the “l” word (“lie”). Greg Sargent explains.